Yields of the Italian 10-year Treasury bonds have now reached today's August highs at 3.207% and the Milan Stock Exchange is losing 0.8%, leaving behind slightly higher DAX or CAC40. The gloomy climate over Italian assets is justified by information from the government. Deputy Prime Minister Luigi Di Maio in a recent interview for Il Fatto Quotidiano said that the country could exceed the threshold of the budget deficit of 3.0% GDP in 2019 if planned investments and reforms aimed at strengthening the recovery will require it.

This is a clear violation of EU rules that speak about compliance with the 3.0% threshold for the deficit and 60% for public debt. The ruling coalition is to present a plan for the next year's budget at a parliamentary meeting on 27 September. A higher deficit will force the EU to issue a warning, and in the worst case scenario, it may impose financial penalties on Italy.

Italy also remains in dispute with the EU regarding immigrants. Di Maio repeated her comments that Italy is against the approval of the seven-year EU financing plan, with which Brussels wants to make it before the elections to the European Parliament. A condition for Italy is changing in the immigration situation, as Rome demands that other member states share the burden related to refugees landing on the Italian coast. If nothing changes, Italy will veto the talks on the budget.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market is trading just below the technical resistance at the level of 1.1747, but the bulls will need more momentum to break through this level. Nevertheless, the nearest support is seen at the level of 1.1663 and 1.1652. Please notice the growing bearish divergence between the price and the momentum oscillator.